CALIFORNIA MUNICIPAL CASH TRUST
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Dear Shareholder:
The Board of Trustees and management of California Municipal Cash Trust
(the "Fund") are pleased to submit for your vote a proposal to sell all of the
Fund's assets to California Municipal Cash Trust (the "Portfolio"), a portfolio
of Federated Municipal Trust (the "Trust"), a money market mutual fund advised
by Federated Management. The Portfolio has an investment objective similar to
that of the Fund. As part of the transaction, shareholders in the Fund would
receive shares in the Portfolio equal in value to their shares in the Fund and
the Fund would be dissolved.
The Board of Trustees of the Fund, as well as Federated Management, the
Fund's adviser, believe the proposed agreement and plan of reorganization is in
the best interest of Fund shareholders for the following reasons:
-- The Trust offers a variety of investment portfolios which invest in
money market municipal securities of individual states and the
reorganization of the Fund as a portfolio of the Trust is expected to
provide operating efficiencies as a result of the common management and
investment advisory services provided to each of these portfolios,
including the Portfolio.
-- The transaction may result in economies of scale to the extent that
certain expenses previously borne by the Fund will be shared by all of
the portfolios of the Trust.
We believe the sale of the Fund's assets in this transaction will present
an excellent investment opportunity for our shareholders. Your vote on the
transaction is critical to its success. The sale will be effected only if
approved by the lesser of the holders of a majority of the Fund's outstanding
shares on the record date or two-thirds of the shares voted at the meeting at
which a quorum is present or represented by proxy. We hope you share our
enthusiasm and will participate by casting your vote in person, or by proxy if
you are unable to attend the meeting. Please read the enclosed prospectus/proxy
statement carefully before you vote. If you have any questions, please feel free
to call us at 800-245-5000.
Thank you for your prompt attention and participation.
Sincerely,
California Municipal Cash Trust
Glen R. Johnson
President
CALIFORNIA MUNICIPAL CASH TRUST
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
TO SHAREHOLDERS OF CALIFORNIA MUNICIPAL CASH TRUST: A Special Meeting of
Shareholders of California Municipal Cash Trust (the "Fund") will be held at
9:00 a.m. on August 5, 1994 at the office of the Fund, Federated Investors
Tower, 19th Floor, Pittsburgh, Pennsylvania 15222-3779 for the following
purposes:
1. To approve or disapprove a proposed Agreement and Plan of Reorganization
between the Fund and Federated Municipal Trust (the "Trust"), on behalf
of its portfolio, California Municipal Cash Trust (the "Portfolio"),
whereby the Trust would acquire all of the assets of the Fund in
exchange for Portfolio shares to be distributed pro rata by the Fund to
its shareholders in complete liquidation and dissolution of the Fund;
and
2. To transact such other business as may properly come before the meeting
or any adjournment thereof.
By Order of the Board of Directors,
JOHN W. MCGONIGLE
Dated: June 20, 1994 Secretary
SHAREHOLDERS OF RECORD AT THE CLOSE OF BUSINESS JUNE 6, 1994 ARE ENTITLED
TO VOTE AT THE MEETING. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE
SIGN AND RETURN THE ENCLOSED PROXY CARD. YOUR VOTE IS IMPORTANT.
TO SECURE THE LARGEST POSSIBLE REPRESENTATION AND TO SAVE THE EXPENSE OF
FURTHER MAILINGS, PLEASE MARK YOUR PROXY CARD, SIGN IT, AND RETURN IT IN THE
ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. YOU
MAY REVOKE YOUR PROXY AT ANY TIME AT OR BEFORE THE MEETING OR VOTE IN PERSON IF
YOU ATTEND THE MEETING.
PROSPECTUS/PROXY STATEMENT
JUNE 20, 1994
ACQUISITION OF THE ASSETS OF
CALIFORNIA MUNICIPAL CASH TRUST
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
TELEPHONE NUMBER: 1-800-245-5000
BY AND IN EXCHANGE FOR SHARES OF
CALIFORNIA MUNICIPAL CASH TRUST
A PORTFOLIO OF FEDERATED MUNICIPAL TRUST
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
TELEPHONE NUMBER: 1-800-245-5000
This Prospectus/Proxy Statement describes the proposed Agreement and Plan
of Reorganization (the "Plan") whereby Federated Municipal Trust, a
Massachusetts business trust (the "Trust"), on behalf of its portfolio
California Municipal Cash Trust (the "Portfolio"), would acquire all of the
assets of California Municipal Cash Trust, a Massachusetts business trust (the
"Fund"), in exchange for Portfolio shares to be distributed pro rata by the Fund
to its shareholders in complete liquidation and dissolution of the Fund. As a
result of the Plan, each shareholder of the Fund will become the owner of
Portfolio shares having a total net asset value equal to the total net asset
value of his or her holdings in the Fund.
The Trust is an open-end management investment company which currently
includes several portfolios, each of which has a distinct investment objective.
The Portfolio is a newly-organized portfolio of the Trust whose investment
objective is to provide current income which is exempt from federal regular
income tax and the personal income taxes imposed by the state of California
consistent with stability of principal. The Portfolio pursues this investment
objective by investing primarily in California municipal securities with
remaining maturities of 13 months or less at the time of purchase by the
Portfolio. As a matter of investment policy, which cannot be changed without the
approval of shareholders, the Portfolio invests so that at least 80% of its
annual interest income is exempt from federal regular and California state
income tax. The Fund has a similar investment objective, which it pursues by
investing primarily in California municipal securities with remaining maturities
of 397 days or less at the time of purchase by the Fund. Both the Portfolio and
the Fund are money market mutual funds which seek to stabilize their offering
and redemption prices at $1.00 per share, although there can be no assurance
that either the Portfolio or the Fund will be able to do so. An investment in
the Portfolio or Fund is neither insured nor guaranteed by the United States
government. For a comparison of the investment policies of the Portfolio and the
Fund, see "Summary-Investment Objectives and Policies".
This Prospectus/Proxy Statement should be retained for future reference. It
sets forth concisely the information about the Trust and the Portfolio that a
prospective investor should know before investing. This Prospectus/Proxy
Statement is accompanied by the Prospectus of the Portfolio dated June 16, 1994
which is incorporated herein by reference. Statements of Additional Information
for the Portfolio dated June 16, 1994 (relating to the Portfolio's prospectus of
the same date) and June 20, 1994 (relating to this Prospectus/Proxy Statement)
containing additional information have been filed with the Securities and
Exchange Commission and are incorporated herein by reference. Copies of the
Statements of Additional Information may be obtained without charge by writing
or calling the Trust at the address and telephone number shown above.
INVESTMENTS IN BOTH THE PORTFOLIO AND THE FUND ARE NOT INSURED OR GUARANTEED BY
THE U.S. GOVERNMENT. BOTH THE PORTFOLIO AND THE FUND ATTEMPT TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE CAN BE NO ASSURANCE THAT THEY
WILL BE ABLE TO DO SO.
THE SHARES OFFERED BY THIS PROSPECTUS/PROXY STATEMENT ARE NOT DEPOSITS OR
OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED OR GUARANTEED BY ANY BANK, AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
TABLE OF CONTENTS
Summary....................................................................... 2
Risk Factors.................................................................. 5
Information About the Reorganization.......................................... 5
Information About the Trust, the Portfolio and the Fund....................... 8
Voting Information............................................................ 9
SUMMARY
ABOUT THE PROPOSED REORGANIZATION
The Board of Trustees of California Municipal Cash Trust (the "Fund") has
voted to recommend to shareholders of the Fund the approval of an Agreement and
Plan of Reorganization (the "Plan") whereby Federated Municipal Trust, a
Massachusetts business trust (the "Trust"), on behalf of its portfolio,
California Municipal Cash Trust (the "Portfolio"), would acquire all of the
assets of the Fund in exchange for Portfolio shares to be distributed pro rata
by the Fund to its shareholders in complete liquidation and dissolution of the
Fund (the "Reorganization"). As a result of the Reorganization, each shareholder
of the Fund will become the owner of Portfolio shares having a total net asset
value equal to the total net asset value of his or her holdings in the Fund on
the date of the Reorganization, i.e., the Closing Date. Neither the Fund nor the
Portfolio Shareholders currently have any exchange rights.
As a condition to the Reorganization transactions, the Trust and the Fund
will receive an opinion of counsel that the Reorganization will be considered a
tax-free "reorganization" under applicable provisions of the Internal Revenue
Code so that no gain or loss will be recognized by either the Trust or the Fund
or their shareholders. The tax cost basis of the Portfolio shares received by
Fund shareholders will be the same as the tax cost basis of their shares in the
Fund.
After the acquisition is completed, the Fund will dissolve and deregister
as an investment company under the Investment Company Act of 1940 (the "1940
Act").
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of the Portfolio is to provide current income
which is exempt from federal regular income tax and the personal income taxes
imposed by the state of California consistent with stability of principal. The
Portfolio pursues its investment objective by investing primarily in California
municipal securities with remaining maturities of 13 months or less at the time
of purchase by the Portfolio, including securities of states, territories, and
possessions of the United States, which are not issued by or on behalf of
California or its political subdivisions and financing authorities, but which
provide income exempt from the federal regular and California state income
taxes. The Portfolio invests so that at least 80% of its annual interest income
is exempt from federal regular and California state income tax. This investment
policy may not be changed without the approval of shareholders.
The investment objective of the Fund is identical to that of the Portfolio.
The Fund pursues its investment strategy by investing primarily in California
municipal securities and the other governmental securities listed above but it
is not subject to the 80% yearly income requirement. Instead, the Fund invests
so that at least 80% of its net assets are invested in California municipal
securities. The Trust does not believe that the Portfolio's policy of investing
so that at least 80% of its annual interest income is exempt from federal
regular and California state income tax is materially different from the Fund's
policy of investing at least 80% of its net assets in California municipal
securities or that such difference in investment policy will have a material
effect on shareholders of the Fund who become Portfolio shareholders as a result
of the Reorganization.
The municipal securities in which the Fund and the Portfolio invest must
either be rated in one of the two highest short-term rating categories by one or
more nationally recognized statistical rating
organizations ("NRSROs") or be of comparable quality to securities having such
ratings. A NRSRO's two highest rating categories are determined without regard
for sub-categories and gradations.
With respect to both the Portfolio and the Fund, unless otherwise
indicated, the investment policies may be changed by the Board of Trustees
without the approval of shareholders. Shareholders will, however, be notified
before any material changes become effective.
Both the Portfolio and the Fund are subject to certain investment
limitations. The Portfolio has certain investment limitations which prohibit it
from borrowing money or pledging securities except that, under certain
circumstances, the Portfolio may borrow up to one-third of the value of its
total assets and pledge up to 15% of the value of those assets to secure such
borrowings. The Fund has similar limitations and additional limitations which
prohibit it from, with respect to 75% of its assets, investing more than 10% of
its total assets in the securities of any one issuer and investing more than 5%
of its total assets in industrial development bonds when the payment of
principal and interest is the responsibility of companies with less than three
years of continuous operations, including the operations of any predecessor.
Reference is hereby made to the Portfolio's Prospectus and Statement of
Additional Information, each dated June 16, 1994, and to the Fund's Prospectus
and Statement of Additional Information, each dated November 30, 1993, which set
forth in full the investment objectives and policies and investment restrictions
of each of the Portfolio and the Fund.
ADVISORY AND OTHER FEES
The annual investment advisory fee for each of the Portfolio and the Fund
is 0.50 of 1% of the Portfolio's or the Fund's, as applicable, average daily net
assets. Federated Management, the investment adviser to the Portfolio (the
"Adviser"), has undertaken to waive a portion of its advisory fee up to the
amount of its advisory fee to reimburse the Portfolio for operating expenses in
excess of limitations imposed by certain states. The Adviser may further
voluntarily waive a portion of its fee or reimburse the Portfolio for certain
operating expenses. This agreement to waive fees and reimburse the Portfolio may
be terminated by the Adviser at any time in its discretion. The Adviser, which
also serves as investment adviser to the Fund, has similarly undertaken to
reimburse the Fund for operating expenses in excess of limitations established
by certain states and may waive all or a portion of its fee. Without such
waiver, the expense ratio of each of the Portfolio and the Fund would be higher
by 0.40 and 0.30 of 1%, respectively, of average daily net assets.
Federated Administrative Services, an affiliate of the Adviser, provides
certain administrative personnel and services necessary to operate the Portfolio
at an annual rate based upon the average aggregate daily net assets of all funds
advised by the Adviser and its affiliates. The rate charged is 0.15 of 1% of the
first $250 million of all such funds' average aggregate daily net assets, 0.125
of 1% on the next $250 million, 0.10 of 1% on the next $250 million and 0.075 of
1% of all such funds' average aggregate daily net assets in excess of $750
million, with a minimum annual fee per portfolio of $125,000 plus $30,000 for
each additional class of such portfolio. Federated Administrative Services,
Inc., an affiliate of the Adviser, provides similar services and personnel to
the Fund at approximate cost. The administrative fee expense for the Fund's most
recent fiscal year was 0.23 of 1% of its average
aggregate daily net assets. The Portfolio estimates that its administrative fee
expense for the current fiscal year will be 0.096 of 1% of its average aggregate
daily net assets.
The Portfolio has a Shareholder Services Plan under which it may make
payments of up to 0.25 of 1% of the average daily net asset value of the
Portfolio to obtain certain services for shareholders and the maintenance of
shareholder accounts. The Fund does not currently have a Shareholder Services
Plan in effect. The maximum total annual operating expenses for the Portfolio is
expected to be 0.59% of the average daily net assets and would be 0.99% of the
average daily net assets absent the voluntary waiver by the Adviser of the
investment advisory fee. The maximum total annual operating expenses for the
Fund is 0.59% of average daily net assets and would be 0.89% of the average
daily net assets absent the voluntary waiver by the Adviser of a portion of the
investment advisory fee.
DISTRIBUTION ARRANGEMENTS
Federated Securities Corp. ("FSC") is the principal distributor for shares
of the Trust and has been the principal distributor for shares of the Fund as
well. Neither the Portfolio nor the Fund have a Rule 12b-1 plan in effect and,
accordingly, do not, nor does FSC, compensate brokers and dealers for sales and
administrative services performed in connection with sales of Portfolio or Fund
shares pursuant to a plan of distribution adopted pursuant to Rule 12b-1.
PURCHASE AND REDEMPTION PROCEDURES
The transfer agent and dividend disbursing agent for the Portfolio is
Federated Services Company. State Street Bank and Trust Company is the transfer
agent and dividend disbursing agent for the Fund. Procedures for the purchase
and redemption of Portfolio shares are identical to procedures applicable to the
purchase and redemption of Fund shares. Any questions about such procedures may
be directed to, and assistance in effecting purchases or redemptions of
Portfolio shares may be obtained from, FSC, principal distributor for each of
the Portfolio and the Fund, at 800-245-5000.
Reference is made to the Prospectus of the Portfolio dated June 16, 1994,
and the Prospectus of the Fund dated November 30, 1993 for a complete
description of the purchase and redemption procedures applicable to purchases
and redemptions of Portfolio and Fund shares, respectively, each of which is
incorporated herein by reference thereto. Set forth below is a brief listing of
the significant purchase and redemption procedures of each of the Portfolio and
the Fund.
Purchases of shares may be made by wire or by check. The minimum initial
investment in each of the Portfolio and the Fund is $25,000; however, an account
may be opened with a smaller amount as long as the $25,000 minimum is reached
within 90 days. All accounts maintained by an institutional investor will be
combined together to determine whether such minimum investment requirement is
met.
The net asset value is calculated at 9:00 a.m. (Pacific time), 10:00 a.m.
(Pacific time) and 1:00 p.m. (Pacific time), on each day on which the Portfolio
and the Fund compute their net asset values. Purchase orders received by wire
before 10:00 a.m. (Pacific time) begin earning dividends that day. Purchase
orders received by check begin earning dividends on the day after the check is
converted into federal funds, which normally occurs one day after receipt by
State Street Bank and Trust Company, the custodian for both the Portfolio and
the Fund.
Redemptions may be made by telephone or by mailing a written request.
Shares are redeemed at their net asset value next determined after the
redemption request is received. Proceeds will be distributed by wire or check.
Checkwriting privileges and debit cards are also available at the shareholder's
request upon payment of a fee. Checks may not be written to close an account.
TAX CONSEQUENCES
As a condition to the Reorganization transactions, the Trust and the Fund
will receive an opinion of counsel that the Reorganization will be considered a
tax-free "reorganization" under applicable provisions of the Internal Revenue
Code so that no gain or loss will be recognized by either the Trust or the Fund
or their shareholders. The tax cost basis of the Portfolio shares received by
Fund shareholders will be the same as the tax cost basis of their shares in the
Fund.
RISK FACTORS
Investments in the Portfolio and the Fund are not insured and are not
guaranteed by the United States government, the state of California or any other
entity. Investment in the Portfolio is subject to certain risks which are set
forth in the Portfolio's Prospectus dated June 16, 1994 and the Statement of
Additional Information dated June 16, 1994 and incorporated herein by reference
thereto. Briefly, these risks include, but are not limited to, the ability of
the issuers of securities owned by the Portfolio to meet their obligations for
the payment of principal and interest when due, actions by any governmental body
of the state of California which have adverse consequences on the ability of
such issuers to do so and the non-diversified structure of the Portfolio. In
recent years, the state of California and its municipal subdivisions and public
authorities have encountered, and continue to encounter, economic and budgetary
difficulties which have adversely affected the financial condition of the state
and certain of its municipal issuers. These difficulties are not expected to be
resolved in the near future. Investment in the Fund carries identical risks, as
more fully described in the Fund's Prospectus dated November 30, 1993 and the
Statement of Additional Information dated November 30, 1993.
INFORMATION ABOUT THE REORGANIZATION
BACKGROUND AND REASONS FOR THE PROPOSED REORGANIZATION
The Fund was established as a Massachusetts business trust in 1989 for the
primary purpose of providing banks and other institutions that hold assets for
individuals, trusts, estates or partnerships with an investment vehicle which
provides income which is exempt from federal regular income tax and California
personal income tax. Although the Board of Trustees of the Fund has been
satisfied with the Fund's performance, it, and the Adviser to the Fund, believe
that the management structure can be simplified and economies of scale possibly
achieved by reorganizing the Fund as a portfolio of the Trust rather than
remaining as a separate entity. Accordingly, the Adviser has recommended to the
Trustees of the Trust that the Portfolio be organized for the purpose of
acquiring the Fund's assets and thereby reorganizing the Fund as a portfolio of
the Trust. The Adviser similarly recommended to the Trustees of the Fund that
its assets be transferred to the Trust, on behalf of the Portfolio, in order to
reorganize it as a separate portfolio of the Trust. In connection with this
proposal, the Adviser emphasized the common
advisory services provided by the Adviser to the Fund and the Trust, the similar
investment objectives and policies of the Fund and the Portfolio and the
administrative convenience and simplification of management achievable by
operating the Fund as a portfolio of the Trust which has several money market
portfolios, each of which is designed for investments in the securities of
various individual states, their municipalities and political subdivisions. The
Trust currently includes the following portfolios: Alabama Municipal Cash Trust,
California Municipal Cash Trust, Connecticut Municipal Cash Trust, Massachusetts
Municipal Cash Trust, Maryland Municipal Cash Trust, Minnesota Municipal Cash
Trust, New Jersey Municipal Cash Trust, New York Municipal Cash Trust, North
Carolina Municipal Cash Trust, Ohio Municipal Cash Trust, Pennsylvania Municipal
Cash Trust and Virginia Municipal Cash Trust. Information concerning each of
these portfolios may be obtained by contacting FSC, the principal distributor
for each portfolio of the Trust, at the address or telephone number set forth on
the cover page of this Prospectus/Proxy Statement.
The Fund's Board of Trustees concluded that reorganization of the Fund as a
portfolio of the Trust could provide for operating efficiencies and economies of
scale. The Fund's Trustees also noted that Fund shareholders would continue to
receive the same quality investment management services from the Adviser as
shareholders of the Portfolio. The Fund's Board of Trustees, including a
majority of the independent Trustees, additionally determined that participation
in the Reorganization is in the best interests of the Fund and that the
interests of the Fund shareholders would not be diluted as a result of its
effecting the Reorganization. Based upon the foregoing considerations, and the
fact that shareholders of the Fund will not suffer any adverse tax consequences
as a result of the Reorganization, the Board of Trustees of the Fund unanimously
voted to approve, and recommend to Fund shareholders the approval of, the
Reorganization.
The Trustees of the Trust, including the independent Trustees, have
unanimously concluded that consummation of the Reorganization is in the best
interests of the Trust and the shareholders of the Portfolio and that the
interests of Portfolio shareholders would not be diluted as a result of
effecting the Reorganization and have unanimously approved the Plan.
DESCRIPTION OF THE PLAN OF REORGANIZATION
The Plan provides that the Trust, on behalf of the Portfolio, will acquire
all of the assets, and assume all of the liabilities, of the Fund in exchange
for Portfolio shares to be distributed pro rata by the Fund to its shareholders
in complete liquidation and dissolution of the Fund on or about August 12, 1994
(the "Closing Date"). Because both the Portfolio and the Fund seek to maintain a
constant net asset value of $1.00 per share, it is expected that Fund
shareholders will receive the same number of shares in the Portfolio as they
held in the Fund immediately prior to the Closing Date. Shareholders of the Fund
will become shareholders of the Portfolio as of 1:00 p.m. (Pacific time) on the
Closing Date and will begin accruing dividends on the next day. Shareholders of
the Fund will earn their last dividend from the Fund on the Closing Date.
Consummation of the Reorganization is subject to the conditions set forth
in the Plan, including receipt of an opinion in form and substance satisfactory
to the Fund and the Trust, on behalf of the Portfolio, as described under the
caption "Federal Income Tax Consequences" below. The Plan may be terminated and
the Reorganization may be abandoned at any time before or after approval by
shareholders of the Fund prior to the Closing Date by either party if it
believes that consummation of the Reorganization would not be in the best
interests of its shareholders.
The Adviser is responsible for the payment of all expenses of the
Reorganization incurred by either party, whether or not the Reorganization is
consummated. Such expenses include, but are not limited to, legal fees,
registration fees, transfer taxes (if any), the fees of banks and transfer
agents and the costs of preparing, printing, copying and mailing proxy
solicitation materials to the Fund's shareholders and the costs of holding the
Special Meeting of Shareholders.
The foregoing description of the Plan entered into between the Trust, on
behalf of the Portfolio, and the Fund is qualified in its entirety by the terms
and provisions of the Plan, a copy of which is attached hereto as Exhibit A and
incorporated herein by reference thereto.
DESCRIPTION OF PORTFOLIO SHARES
Shares of the Portfolio to be issued to shareholders of the Fund under the
Plan will be fully paid and nonassessable when issued and transferable without
restriction and will have no preemptive or conversion rights. Reference is
hereby made to the Prospectus of the Portfolio dated June 16, 1994 provided
herewith for additional information about Portfolio shares.
FEDERAL INCOME TAX CONSEQUENCES
As a condition to the Reorganization transactions, the Trust, on behalf of
the Portfolio, and the Fund will receive an opinion from Dickstein, Shapiro &
Morin, L.L.P., counsel to the Trust and the Fund, to the effect that, on the
basis of the existing provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), current administrative rules and court decisions, for
federal income tax purposes: (1) the Reorganization as set forth in the Plan
will constitute a tax-free reorganization under section 368(a)(1)(F) of the
Code; (2) no gain or loss will be recognized by the Portfolio upon its receipt
of the Fund's assets in exchange for Portfolio shares; (3) the holding period
and basis for the Fund's assets acquired by the Portfolio will be the same as
the holding period and the basis to the Fund immediately prior to the
Reorganization; (4) no gain or loss will be recognized by the Fund upon transfer
of its assets to the Portfolio in exchange for Portfolio shares; (5) no gain or
loss will be recognized by shareholders of the Fund upon exchange of their Fund
shares for Portfolio shares; (6) the holding period of Portfolio shares received
by shareholders of the Fund pursuant to the Plan will be the same as the holding
period of Fund shares held immediately prior to the Reorganization, provided the
Fund shares were held as capital assets on the date of the Reorganization; and
(7) the basis of Portfolio shares received by shareholders of the Fund pursuant
to the Plan will be the same as the basis of Fund shares held immediately prior
to the Reorganization.
COMPARATIVE INFORMATION ON SHAREHOLDER RIGHTS AND OBLIGATIONS
Each of the Trust and the Fund is organized as a business trust pursuant to
a Declaration of Trust under the laws of the Commonwealth of Massachusetts. The
rights of shareholders of the Trust and shareholders of the Fund as set forth in
the applicable Declaration of Trust and Bylaws are substantially identical. Set
forth below is a brief summary of the significant rights of shareholders of the
Portfolio and of the Fund.
Neither the Portfolio nor the Fund are required to hold annual meetings of
shareholders. Shareholder approval is necessary only for certain changes in
operations or the election of trustees under certain circumstances. A special
meeting of shareholders of either the Trust or the Fund for any permissible
purpose is required to be called by the Trustees upon the written request of the
holders of at least 10% of the outstanding shares of the Trust or the Fund, as
the case may be.
Under certain circumstances, shareholders of the Portfolio may be held
personally liable as partners under Massachusetts law for obligations of the
Trust. To protect shareholders of the Portfolio, the Trust has filed legal
documents with the Commonwealth of Massachusetts that expressly disclaim the
liability of shareholders of the Portfolio for such acts or obligations of the
Trust. These documents require that notice of this disclaimer be given in each
agreement, obligation or instrument that the Trust or its trustees enter into or
sign on behalf of the Trust.
In the unlikely event a shareholder of the Portfolio is held personally
liable for the Trust's obligations, the Trust is required to use its property to
protect or compensate the shareholder. On request, the Trust will defend any
claims made and pay any judgment against a shareholder of the Portfolio for any
act or obligation of the Trust. Therefore, financial loss resulting from
liability as a shareholder of the Portfolio will occur only if the Trust cannot
meet its obligations to indemnify shareholders and pay judgments against them
from the assets of the Trust.
Shareholders of the Fund have the same potential liability under
Massachusetts law.
CAPITALIZATION
The following table sets forth the capitalization of the Portfolio and the
Fund as of June 6, 1994 and on a pro forma basis as of that date:
<TABLE>
<CAPTION>
PRO FORMA
PORTFOLIO FUND COMBINED
--------- ------------ -----------
<S> <C> <C> <C>
Net Assets............................................ $100.00 $96,709,403 $96,709,503
Price Per Share....................................... $1.00 $1.00 $1.00
</TABLE>
INFORMATION ABOUT THE TRUST, THE PORTFOLIO AND THE FUND
CALIFORNIA MUNICIPAL CASH TRUST, A PORTFOLIO OF FEDERATED MUNICIPAL TRUST
Information about the Trust and the Portfolio is contained in the
Portfolio's current Prospectus dated June 16, 1994, a copy of which is included
herewith and incorporated by reference herein. Additional information about the
Trust and the Portfolio is included in the Portfolio's Statement of Additional
Information dated June 16, 1994, which is incorporated herein by reference.
Copies of the Statement of Additional Information, which has been filed with the
Securities and Exchange Commission (the "SEC"), may be obtained without charge
by contacting the Trust at 1-800-245-5000 or by writing the Trust at Federated
Investors Tower, Pittsburgh, PA 15222-3779. The Trust, on behalf of the
Portfolio, is subject to the informational requirements of the Securities Act of
the 1940 Act and in accordance therewith files reports and other information
with the SEC. Reports, proxy and information statements and other information
filed by the Trust, on behalf of the Portfolio, can be obtained by calling or
writing the Trust and can also be inspected and copied by the public at
the public reference facilities maintained by the SEC in Washington, D.C.
located at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at
certain of its regional offices located at Suite 1400, Northwestern Atrium
Center, 500 West Madison Street, Chicago, IL 60621 and 13th Floor, Seven World
Trade Center, New York, NY 10048. Copies of such material can be obtained at
prescribed rates from the Public Reference Branch, Office of Consumer Affairs
and Information Services, SEC, 450 Fifth Street, N.W., Washington, D.C. 20549.
This Prospectus/Proxy Statement, which constitutes part of a Registration
Statement filed by the Trust, on behalf of the Portfolio, with the SEC under the
1933 Act, omits certain of the information contained in the Registration
Statement. Reference is hereby made to the Registration Statement and to the
exhibits thereto for further information with respect to the Trust, the
Portfolio and the shares offered hereby. Statements contained herein concerning
the provisions of documents are necessarily summaries of such documents, and
each such statement is qualified in its entirety by reference to the copy of the
applicable documents filed with the SEC.
CALIFORNIA MUNICIPAL CASH TRUST
Information about the Fund is contained in the Fund's current Prospectus
dated November 30, 1993 and its Statement of Additional Information dated
November 30, 1993, which are incorporated herein by reference. Financial
Statements for the Fund for the six months ended March 31, 1993 may be found in
the Statement of Additional Information dated June 16, 1994 relating to this
Prospectus/Proxy Statement, which has been filed by the Trust with the SEC.
Copies of such Prospectus and Statements of Additional Information may be
obtained without charge from the Trust by calling 1-800-245-5000 or by writing
to the Trust at Federated Investors Tower, Pittsburgh, PA 15222-3779. The Fund
is subject to the informational requirements of the 1933 Act, the 1934 Act and
the 1940 Act and in accordance therewith files reports and other information
with the SEC. Reports, proxy and information statements and other information
filed by the Fund can be obtained by calling or writing the Fund and can also be
inspected at the public reference facilities maintained by the SEC or obtained
at prescribed rates at the addresses listed in the previous section.
VOTING INFORMATION
This Prospectus/Proxy Statement is furnished in connection with the
solicitation by the Board of Trustees of the Fund of proxies for use at the
Special Meeting of Shareholders (the "Meeting") to be held on August 5, 1994 and
at any adjournment thereof. The proxy confers discretionary authority on the
persons designated therein to vote on other business not currently contemplated
which may properly come before the Meeting. A proxy, if properly executed, duly
returned and not revoked, will be voted in accordance with the specifications
thereon; if no instructions are given, such proxy will be voted in favor of the
Plan. A shareholder may revoke a proxy at any time prior to use by filing with
the Secretary of the Fund an instrument revoking the proxy, by submitting a
proxy bearing a later date or by attending and voting at the Meeting.
The cost of the solicitation, including the printing and mailing of proxy
materials, will be borne by the Adviser. In addition to solicitations through
the mails, proxies may be solicited by officers, employees and agents of the
Fund and the Adviser at no additional cost to the Fund. Such solicitations
9
may be by telephone. The Adviser will reimburse custodians, nominees and
fiduciaries for the reasonable costs incurred by them in connection with
forwarding solicitation materials to the beneficial owners of shares held of
record by such persons.
OUTSTANDING SHARES AND VOTING REQUIREMENTS
The Board of Trustees of the Fund has fixed the close of business on June
6, 1994 as the record date for the determination of shareholders entitled to
notice of and to vote at the Special Meeting of Shareholders and any adjournment
thereof. As of the record date, there were 96,709,403 shares of the Fund
outstanding. Each Fund share is entitled to one vote and fractional shares have
proportionate voting rights. On the record date, Fiduciary Trust Company
International owned of record 19,481,500 shares, or 20.14%, Citibank, N.A. owned
of record 15,749,733 shares, or 16.28%, Kenpar & Co. owned of record 7,479,837
shares, or 7.73%, Republic & Co. owned of record 6,474,100 shares, or 6.69%, and
First Interstate Bank of Arizona, N.A. owned of record 6,179,561 shares, or
6.38%, of the Fund's outstanding shares and each such shareholder will own the
same number of shares of the Portfolio after the consummation of the
Reorganization if no further purchases or redemptions are made by such
shareholder. On such date, no other person owned of record, or to the knowledge
of the Adviser, beneficially owned, 5% or more of the Fund's outstanding shares.
On the record date, the trustees and officers of the Fund as a group owned less
than 1% of the outstanding shares of the Fund.
As of the record date, there were 100 shares of the Portfolio outstanding
all of which were owned by the Adviser.
Approval of the Plan requires the affirmative vote of the lesser of a
majority of the Fund's outstanding shares or the affirmative vote of two-thirds
of the shares voted at the meeting at which a quorum is present or represented
by proxy. The votes of shareholders of the Portfolio are not being solicited
since their approval is not required in order to effect the Reorganization.
A majority of the outstanding shares of the Fund, represented in person or
by proxy, will be required to constitute a quorum at the Special Meeting for the
purpose of voting on the proposed Reorganization. For purposes of determining
the presence of a quorum, shares represented by abstentions and "broker
non-votes" will be counted as present, but not as votes cast, at the Special
Meeting. Under the Fund's Declaration of Trust, the approval of any action
submitted to shareholders is determined on the basis of a majority of votes
entitled to be cast at the Special Meeting. Under the 1940 Act, however, matters
subject to the requirements of the 1940 Act, including the Reorganization, are
determined on the basis of a percentage of votes present at the Special Meeting,
which would have the effect of treating abstentions and "broker non-votes" as if
they were votes against the proposal.
DISSENTER'S RIGHT OF APPRAISAL
Shareholders of the Fund objecting to the Reorganization have no appraisal
rights under the Fund's Declaration of Trust or Massachusetts law. Under the
Plan, if approved by Fund shareholders, each Fund shareholder will become the
owner of Portfolio shares having a total net asset value equal to the total net
asset value of his or her holdings in the Fund at the Closing Date.
OTHER MATTERS
Management of the Fund knows of no other matters that may properly be, or
which are likely to be, brought before the meeting. However, if any other
business shall properly come before the meeting, the persons named in the proxy
intend to vote thereon in accordance with their best judgment.
So far as management is presently informed, there is no litigation pending
or threatened against the Trust.
Whether or not shareholders expect to attend the meeting, all shareholders
are urged to sign, fill in and return the enclosed proxy form promptly.
Trustees, and this Agreement will constitute the valid and legally binding
obligation of the Acquiring Fund enforceable in accordance with its terms,
subject to the effect of bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other similar laws relating to or affecting creditors'
rights generally and court decisions with respect thereto, and to general
principles of equity and the discretion of the court (regardless of whether the
enforceability is considered in a proceeding in equity or at law).
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION dated May 6, 1994 (the "Agreement"),
between FEDERATED MUNICIPAL TRUST, a Massachusetts business trust (the "Trust")
on behalf of its portfolio CALIFORNIA MUNICIPAL CASH TRUST (hereinafter called
the "Acquiring Fund"), and CALIFORNIA MUNICIPAL CASH TRUST, a Massachusetts
business trust (hereinafter called the "Acquired Fund").
This Agreement is intended to be and is adopted as a plan of reorganization
and liquidation within the meaning of Section 368(a)(1)(F) of the United States
Internal Revenue Code of 1986, as amended (the "Code"). The reorganization (the
"Reorganization") will consist of the transfer of all of the assets of the
Acquired Fund in exchange solely for shares of beneficial interest of the
Acquiring Fund (the "Acquiring Fund Shares") and the distribution, after the
Closing Date hereinafter referred to, of the Acquiring Fund Shares to the
shareholders of the Acquired Fund in liquidation of the Acquired Fund as
provided herein, all upon the terms and conditions hereinafter set forth in this
Agreement.
WHEREAS, the Acquired Fund and the Acquiring Fund are registered open-end
management investment companies and the Acquired Fund owns securities in which
the Acquiring Fund is permitted to invest;
WHEREAS, both the Acquired Fund and the Acquiring Fund are authorized to
issue their shares of beneficial interest;
WHEREAS, the Board of Trustees, including a majority of the Trustees who
are not "interested persons" (as defined under the Investment Company Act of
1940, as amended (the "1940 Act")), of the Acquiring Fund has determined that
the exchange of all or substantially all of the assets of the Acquired Fund for
Acquiring Fund Shares is in the best interests of the Acquiring Fund
shareholders and that the interests of the existing shareholders of the
Acquiring Fund would not be diluted as a result of this transaction; and
WHEREAS, the Board of Trustees, including a majority of the Trustees who
are not "interested persons" (as defined under the 1940 Act), of the Acquired
Fund has determined that the exchange of all of the assets of the Acquired Fund
for Acquiring Fund Shares is in the best interests of the Acquired Fund
shareholders and that the interests of the existing shareholders of the Acquired
Fund would not be diluted as a result of this transaction;
NOW THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties agree as follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND IN EXCHANGE FOR THE ACQUIRING
FUND SHARES AND LIQUIDATION OF THE ACQUIRED FUND.
1.1 Subject to the terms and conditions contained herein, the Acquired
Fund agrees to assign, transfer and convey to the Acquiring Fund all of the
assets of the Acquired Fund, including all securities and cash, and the
Acquiring Fund agrees in exchange therefor (i) to deliver to the
Acquired Fund the number of Acquiring Fund Shares, including fractional
Acquiring Fund Shares, determined as set forth in paragraph 2.3. Such
transaction shall take place at the closing (the "Closing") on the
closing date (the "Closing Date") provided for in paragraph 3.1 In lieu
of delivering certificates for the Acquiring Fund Shares, the Acquiring
Fund shall credit the Acquiring Fund Shares to the Acquired Fund's
account on the stock record books of the Acquiring Fund and shall
deliver a confirmation thereof to the Acquired Fund.
1.2 The Acquired Fund will discharge all of its liabilities and
obligations prior to the Closing Date.
1.3 Delivery of the assets of the Acquired Fund to be transferred
shall be made on the Closing Date and shall be delivered to State Street
Bank and Trust Company (hereinafter called "State Street"), Boston,
Massachusetts, the Acquiring Fund's custodian (the "Custodian"), for the
account of the Acquiring Fund, together with proper instructions and all
necessary documents to transfer to the account of the Acquiring Fund, free
and clear of all liens, encumbrances, rights, restrictions and claims. All
cash delivered shall be in the form of currency and immediately available
funds payable to the order of the Custodian for the account of the
Acquiring Fund.
1.4 The Acquired Fund will pay or cause to be paid to the Acquiring
Fund any dividends or interest received on or after the Closing Date with
respect to assets transferred to the Acquiring Fund hereunder. The Acquired
Fund will transfer to the Acquiring Fund any distributions, rights or other
assets received by the Acquired Fund after the Closing Date as
distributions on or with respect to the securities transferred. Such assets
shall be deemed included in assets transferred to the Acquiring Fund on the
Closing Date and shall not be separately valued.
1.5 As soon after the Closing Date as is conveniently practicable (the
"Liquidation Date"), the Acquired Fund will liquidate and distribute pro
rata to the Acquired Fund's shareholders of record, determined as of the
close of business on the Closing Date (the "Acquired Fund Shareholders"),
the Acquiring Fund Shares received by the Acquired Fund pursuant to
paragraph 1.1. Such liquidation and distribution will be accomplished by
the transfer of the Acquiring Fund Shares then credited to the account of
the Acquired Fund on the books of the Acquiring Fund to open accounts on
the share record books of the Acquiring Fund in the names of the Acquired
Fund Shareholders and representing the respective pro rata number of the
Acquiring Fund Shares due such shareholders. All issued and outstanding
shares of the Acquired Fund will simultaneously be cancelled on the books
of the Acquired Fund. Share certificates representing interests in the
Acquired Fund will represent a number of Acquiring Fund Shares after the
Closing Date as determined in accordance with Section 2.3. The Acquiring
Fund shall not issue certificates representing the Acquiring Fund Shares in
connection with such exchange.
1.6 Ownership of Acquiring Fund Shares will be shown on the books of
the Acquiring Fund's transfer agent. Shares of the Acquiring Fund will be
issued in the manner described in the Acquiring Fund's current prospectus
and statement of additional information.
1.7 Any transfer taxes payable upon issuance of the Acquiring Fund
Shares in a name other than the registered holder of the Acquired Fund
shares on the books of the Acquired Fund as of that time shall, as a
condition of such issuance and transfer, be paid by the person to whom such
Acquiring Fund Shares are to be issued and transferred.
1.8 Any reporting responsibility of the Acquired Fund is and shall
remain the responsibility of the Acquired Fund up to and including the
Closing Date and such later dates, with respect to dissolution and
deregistration of the Acquired Fund, on which the Acquired Fund is
deregistered and dissolved.
1.9 The Acquired Fund shall be deregistered as an investment company
under the 1940 Act and dissolved as a Massachusetts business trust promptly
following the Closing Date and the making of all distributions pursuant to
paragraph 1.5.
2. VALUATION.
2.1 The value of the Acquired Fund's net assets to be acquired by the
Acquiring Fund hereunder shall be the value of such assets computed as of
1:00 p.m. (Pacific time) on the Closing Date (such time and date being
hereinafter called the "Valuation Date"), using the valuation procedures
set forth in the Acquiring Fund's then-current prospectus or statement of
additional information.
2.2 The net asset value of an Acquiring Fund Share shall be the net
asset value per share computed as of 1:00 p.m. (Pacific time) on the
Valuation Date, using the valuation procedures set forth in the Acquiring
Fund's then-current prospectus or statement of additional information.
2.3 The number of the Acquiring Fund Shares to be issued (including
fractional shares, if any) in exchange for the Acquired Fund's net assets
shall be determined by dividing the value of the net assets of the Acquired
Fund determined using the same valuation procedures referred to in
paragraph 2.1 by the net asset value of one Acquiring Fund Share determined
in accordance with paragraph 2.2.
2.4 All computations of value shall be made in accordance with the
regular practices of the Acquiring Fund.
3. CLOSING AND CLOSING DATE.
3.1 The Closing Date shall be August 1, 1994 or such later date as the
parties may mutually agree. All acts taking place at the Closing Date shall
be deemed to take place simultaneously as of the close of business on the
Closing Date unless otherwise provided. The Closing shall be held at 1:00
p.m. (Pacific time) at the offices of the Acquiring Fund, Federated
Investors Tower, Pittsburgh, PA 15222-3779, or such other time and/or place
as the parties may mutually agree.
3.2 If on the Valuation Date (a) the primary trading market for
portfolio securities of the Acquiring Fund or the Acquired Fund shall be
closed to trading or trading thereon shall be restricted; or (b) trading or
the reporting of trading shall be disrupted so that accurate appraisal of
the value of the net assets of the Acquiring Fund or the Acquired Fund is
impracticable, the Closing Date shall be postponed until the first business
day after the day when trading shall have been fully resumed and reporting
shall have been restored.
3.3 Federated Services Company, as transfer agent for each of the
Acquired Fund and Acquiring Fund, shall deliver at the Closing a
certificate of an authorized officer stating that its records contain the
names and addresses of the Acquired Fund Shareholders and the number and
percentage ownership of outstanding shares owned by each such
shareholder immediately prior to the Closing. The Acquiring Fund shall
issue and deliver a confirmation evidencing the Acquiring Fund Shares
to be credited on the Closing Date to the Secretary of the Acquired
Fund, or provide evidence satisfactory to the Acquired Fund that such
Acquiring Fund Shares have been credited to the Acquired Fund's account
on the books of the Acquiring Fund. At the Closing, each party shall
deliver to the other such bills of sale, checks, assignments,
assumption agreements, share certificates, if any, receipts or other
documents as such other party or its counsel may reasonably request.
4. REPRESENTATIONS AND WARRANTIES.
4.1 The Acquired Fund represents and warrants to the Acquiring Fund as
follows:
(a) The Acquired Fund is a business trust duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts and has power to own all of its properties and assets and
to carry out this Agreement.
(b) The Acquired Fund is registered under the 1940 Act, as an
open-end, non-diversified, management investment company, and such
registration has not been revoked or rescinded and is in full force and
effect.
(c) The Acquired Fund is not, and the execution, delivery and
performance of this Agreement will not result, in material violation of
its Declaration of Trust or By-Laws or of any agreement, indenture,
instrument, contract, lease or other undertaking to which the Acquired
Fund is a party or by which it is bound.
(d) The Acquired Fund has no material contracts or other
commitments outstanding (other than this Agreement) which will result in
liability to it after the Closing Date.
(e) No litigation or administrative proceeding or investigation of
or before any court or governmental body is currently pending or to its
knowledge threatened against the Acquired Fund or any of its properties
or assets which, if adversely determined, would materially and adversely
affect its financial condition or the conduct of its business. The
Acquired Fund knows of no facts which might form the basis for the
institution of such proceedings, and is not a party to or subject to the
provisions of any order, decree or judgment of any court or governmental
body which materially and adversely affects its business or its ability
to consummate the transactions herein contemplated.
(f) The current prospectus and statement of additional information
of the Acquired Fund conform in all material respects to the applicable
requirements of the Securities Act of 1933, as amended (the "1933 Act"),
and the 1940 Act and the rules and regulations of the Securities and
Exchange Commission (the "Commission") thereunder and do not include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein as necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(g) The Statements of Assets and Liabilities of the Acquired Fund
at September 30, 1992 and 1993 have been audited by Deloitte & Touche,
independent auditors, and have been
prepared in accordance with generally accepted accounting principles,
consistently applied, and such statements (copies of which have been
furnished to the Acquiring Fund) fairly reflect the financial
condition of the Acquired Fund as of such dates, and there are no
known contingent liabilities of the Acquired Fund as of such dates
not disclosed therein.
(h) Since September 30, 1993, there has not been any material
adverse change in the Acquired Fund's financial condition, assets,
liabilities or business other than changes occurring in the ordinary
course of business, or any incurrence by the Acquired Fund of
indebtedness maturing more than one year from the date such indebtedness
was incurred, except as otherwise disclosed to and accepted by the
Acquiring Fund.
(i) At the Closing Date, all Federal and other tax returns and
reports of the Acquired Fund required by law to have been filed by such
dates shall have been filed, and all Federal and other taxes shall have
been paid so far as due, or provision shall have been made for the
payment thereof, and to the best of the Acquired Fund's knowledge no
such return is currently under audit and no assessment has been asserted
with respect to such returns.
(j) For each fiscal year of its operation, the Acquired Fund has
met the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company.
(k) All issued and outstanding shares of the Acquired Fund are, and
at the Closing Date will be, duly and validly issued and outstanding,
fully paid and non-assessable. All of the issued and outstanding shares
of the Acquired Fund will, at the time of the Closing, be held by the
persons and in the amounts set forth in the records of the transfer
agent as provided in paragraph 3.3. The Acquired Fund does not have
outstanding any options, warrants or other rights to subscribe for or
purchase any of the Acquired Fund shares, nor is there outstanding any
security convertible into any of the Acquired Fund Shares.
(l) On the Closing Date, the Acquired Fund will have full right,
power and authority to sell, assign, transfer and deliver the assets to
be transferred by it hereunder.
(m) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary
action on the part of the Acquired Fund's Trustees and, subject to the
approval of the Acquired Fund Shareholders, this Agreement will
constitute the valid and legally binding obligation of the Acquired Fund
enforceable in accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar laws relating to or affecting creditors'
rights generally and court decisions with respect thereto, and to
general principles of equity and the discretion of the court (regardless
of whether the enforceability is considered in a proceeding in equity or
at law).
(n) The prospectus/proxy statement of the Acquired Fund (the
"Prospectus/Proxy Statement") to be included in the Registration
Statement referred to in paragraph 5.5 (other than information therein
that relates to the Acquiring Fund) will, on the effective date of the
Registration Statement and on the Closing Date, not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
such statements were made, not misleading.
(o) The Acquired Fund has entered into an agreement under which
Federated Management will assume the expense of the reorganization
including accountants' fees, legal fees, registration fees, transfer
taxes (if any), the fees of banks and transfer agents and the costs of
preparing, printing, copying and mailing proxy solicitation materials to
the Acquiring Fund's shareholders and the costs of holding the Special
Meeting of Shareholders.
4.2 The Acquiring Fund represents and warrants to the Acquired Fund as
follows:
(a) The Trust is a business trust duly organized, validly existing
and in good standing under the laws of the Commonwealth of Massachusetts
and the Acquiring Fund has the power to carry on its business as it is
now being conducted and to carry out this Agreement.
(b) The Trust is registered under the 1940 Act as an open-end,
non-diversified, management investment company, and such registration
has not been revoked or rescinded and is in full force and effect.
(c) The current prospectus and statement of additional information
of the Acquiring Fund conform in all material respectus to the
applicable requirements of the 1933 Act and the 1940 Act and the rules
and regulations of the Commission thereunder and do not include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(d) The Acquiring Fund is not, and the execution, delivery and
performance of this Agreement will not result, in material violation of
the Trust's Declaration of Trust or By-Laws or of any agreement,
indenture, instrument, contract, lease or other undertaking to which the
Acquiring Fund is a party or by which it is bound.
(e) No litigation or administrative proceeding or investigation of
or before any court or governmental body is currently pending or to its
knowledge threatened against the Acquiring Fund or any of its properties
or assets which, if adversely determined, would materially and adversely
affect its financial condition or the conduct of its business. The
Acquiring Fund knows of no facts which might form the basis for the
institution of such proceedings, and is not a party to or subject to the
provisions of any order, decree or judgment of any court or governmental
body which materially and adversely affects its business or its ability
to consummate the transactions contemplated herein.
(f) The Statement of Assets and Liabilities of the Acquiring Fund
at May 24, 1994, have been audited by Arthur Andersen, independent
auditors, and have been prepared in accordance with generally accepted
accounting principles, and such statements (copies of which have been
furnished to the Acquired Fund) fairly reflect the financial condition
of the Acquiring Fund as of such date.
(g) Since May 24, 1994, there has not been any material adverse
change in the Acquiring Fund's financial condition, assets, liabilities
or business other than changes occurring in the
ordinary course of business, or any incurrence by the Acquiring Fund
of any indebtedness, except as otherwise disclosed to and accepted by
the Acquired Fund.
(h) At the Closing Date, all Federal and other tax returns and
reports of the Acquiring Fund required by law then to be filed shall
have been filed, and all Federal and other taxes shown as due on said
returns and reports shall have been paid or provision shall have been
made for the payment thereof.
(i) For each fiscal year of its operation, the Acquiring Fund will
meet the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company.
(j) All issued and outstanding shares of the Acquiring Fund are,
and at the Closing Date will be, duly and validly issued and
outstanding, fully paid and non-assessable. The Acquiring Fund does not
have outstanding any options, warrants or other right to subscribe for
or purchase any of the Acquiring Fund Shares, nor is there outstanding
any security convertible into any Acquiring Fund Shares.
(k) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary
action, if any, on the part of the Acquiring Fund's Trustees, and this
Agreement will constitute the valid and legally binding obligation of
the Acquiring Fund enforceable in accordance with its terms, subject to
the effect of bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other similar laws relating to or affecting
creditors' rights generally and court decisions with respect thereto,
and to general principles of equity and the discretion of the court
(regardless of whether the enforceability is considered in a proceeding
in equity or at law).
(l) The Prospectus/Proxy Statement to be included in the
Registration Statement (only insofar as it relates to the Acquiring
Fund) will, on the effective date of the Registration Statement and on
the Closing Date, not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under
which such statements were made, not misleading.
(m) The Acquiring Fund has entered into an agreement under which
Federated Management will assume the expenses of the reorganization
including accountants' fees, legal fees, registration fees, transfer
taxes (if any), the fees of banks and transfer agents and the costs of
preparing, printing, copying and mailing proxy solicitation materials to
the Acquired Fund's shareholders and the costs of holding the Special
Meeting of Shareholders.
5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND.
5.1 The Acquiring Fund and the Acquired Fund each will operate its
business in the ordinary course between the date hereof and the Closing
Date, it being understood that such ordinary course of business will
include customary dividends and distributions.
5.2 The Acquired Fund will call a meeting of the Acquired Fund
Shareholders to consider and act upon this Agreement and to take all other
action necessary to obtain approval of the transactions contemplated
herein.
5.3 Subject to the provisions of this Agreement, the Acquiring Fund
and the Acquired Fund will each take, or cause to be taken, all action, and
do or cause to be done, all things reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by
this Agreement.
5.4 As promptly as practicable, but in any case within sixty days
after the Closing Date, the Acquired Fund shall furnish the Acquiring Fund,
in such form as is reasonably satisfactory to the Acquiring Fund, a
statement of the earnings and profits of the Acquired Fund for Federal
income tax purposes which will be carried over to the Acquiring Fund as a
result of Section 381 of the Code and which will be certified by the
Acquired Fund's President and its Treasurer.
5.5 The Acquired Fund will provide the Acquiring Fund with information
reasonably necessary for the preparation of a prospectus (the "Prospectus")
which will include the Proxy Statement, referred to in paragraph 4.1(o),
all to be included in a Registration Statement on Form N-14 of the
Acquiring Fund (the "Registration Statement"), in compliance with the 1933
Act, the Securities Exchange Act of 1934, as amended, and the 1940 Act in
connection with the meeting of the Acquired Fund Shareholders to consider
approval of this Agreement and the transactions contemplated herein.
5.6 The Acquiring Fund agrees to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act, the 1940 Act and
such of the state Blue Sky or securities laws as it may deem appropriate in
order to continue its operations after the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND.
The obligations of the Acquiring Fund to complete the transactions provided
for herein shall be subject, at its election, to the performance by the Acquired
Fund of all the obligations to be performed by it hereunder on or before the
Closing Date and, in addition thereto, the following conditions:
6.1 All representations and warranties of the Acquired Fund contained
in this Agreement shall be true and correct in all material respects as of
the date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force
and effect as if made on and as of the Closing Date.
6.2 The Acquired Fund shall have delivered to the Acquiring Fund a
statement of the Acquired Fund's assets, together with a list of the
Acquired Fund's portfolio securities showing the tax costs of such
securities by lot and the holding periods of such securities, as of the
Closing Date, certified by the Treasurer of the Acquired Fund.
6.3 The Acquired Fund shall have delivered to the Acquiring Fund on
the Closing Date a certificate executed in its name by its President or
Vice President and its Treasurer, in form and substance satisfactory to the
Acquiring Fund, to the effect that the representations and warranties of
the Acquired Fund made in this Agreement are true and correct at and as of
the Closing Date, except as they may be affected by the transactions
contemplated by this Agreement, and as to such other matters as the
Acquiring Fund shall reasonably request.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND.
The obligations of the Acquired Fund to consummate the transactions
provided herein shall be subject, at its election, to the performance by the
Acquiring Fund of all the obligations to be performed by it hereunder on or
before the Closing Date and, in addition thereto, the following conditions:
7.1 All representations and warranties of the Acquiring Fund contained
in this Agreement shall be true and correct in all material respects as of
the date hereof and, except as they may be affected by the transactions
contemplated by this Agreement, as of the Closing Date with the same force
and effect as if made on and as of the Closing Date.
7.2 The Acquiring Fund shall have delivered to the Acquired Fund on
the Closing Date a certificate executed in its name by its President or
Vice President and its Treasurer, in form and substance reasonably
satisfactory to the Acquired Fund, to the effect that the representations
and warranties of the Acquiring Fund made in this Agreement are true and
correct at and as of the Closing Date, except as they may be affected by
the transactions contemplated by this Agreement, and as to such other
matters as the Acquired Fund shall reasonably request.
8. FURTHER CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE ACQUIRING FUND
AND THE ACQUIRED FUND.
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Acquired Fund or the Acquiring Fund, the other
party to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement.
8.1 The Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding
shares of the Acquired Fund in accordance with the provisions of the
Acquired Fund's Declaration of Trust.
8.2 On the Closing Date no action, suit or other proceeding shall be
pending before any court or governmental agency in which it is sought to
restrain or prohibit, or obtain damages or other relief in connection with,
this Agreement or the transactions contemplated herein.
8.3 All consents of other parties and all other consents, orders and
permits of Federal, state and local regulatory authorities (including those
of the Commission and of state Blue Sky and securities authorities) deemed
necessary by the Acquiring Fund or the Acquired Fund to permit
consummation, in all material respects, of the transactions contemplated
hereby shall have been obtained, except where failure to obtain any such
consent, order or permit would not involve a risk of a material adverse
effect on the assets or properties of the Acquiring Fund or the Acquired
Fund, provided that either party hereto may for itself waive any of such
conditions.
8.4 Registration Statement shall have become effective under the 1933
Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation
or proceeding for that purpose shall have been instituted or be pending,
threatened or contemplated under the 1933 Act.
8.5 Acquiring Fund shall have received an opinion of Dickstein,
Shapiro & Morin, L.L.P. substantially to the effect that for Federal income
tax purposes:
(a) The transfer of all or substantially all of the Acquired Fund
assets in exchange for the Acquiring Fund Shares and the distribution of
the Acquiring Fund Shares to the shareholders of the Acquired Fund in
liquidation of the Acquired Fund will constitute a "reorganization"
within the meaning of Section 368(a)(1)(F) of the Code; (b) No gain or
loss will be recognized by the Acquiring Fund upon the receipt of the
assets of the Acquired Fund solely in exchange for the Acquiring Fund
Shares; (c) No gain or loss will be recognized by the Acquired Fund upon
the transfer of the Acquired Fund assets to the Acquiring Fund in
exchange for the Acquiring Fund Shares or upon the distribution (whether
actual or constructive) of the Acquiring Fund Shares to Acquired Fund
Shareholders in exchange for their shares of the Acquired Fund; (d) No
gain or loss will be recognized by the Acquired Fund Shareholders upon
the exchange of their Acquired Fund shares for the Acquiring Fund
Shares; (e) The tax basis of the Acquired Fund assets acquired by the
Acquiring Fund will be the same as the tax basis of such assets to the
Acquired Fund immediately prior to the Reorganization; (f) The tax basis
of the Acquiring Fund Shares received by each of the Acquired Fund
Shareholders pursuant to the Reorganization will be the same as the tax
basis of the Acquired Fund shares held by such shareholder immediately
prior to the Reorganization; (g) The holding period of the assets of the
Acquired Fund in the hands of the Acquiring Fund will include the period
during which those assets were held by the Acquired Fund; and (h) The
holding period of the Acquiring Fund Shares to be received by each
Acquired Fund Shareholder will include the period during which the
Acquired Fund shares exchanged therefor were held by such shareholder
(provided the Acquired Fund shares were held as capital assets on the
date of the Reorganization).
9. TERMINATION OF AGREEMENT.
9.1 This Agreement and the transactions contemplated hereby may be
terminated and abandoned by resolution of the Board of Trustees of the
Acquired Fund or the Acquiring Fund at any time prior to the Closing Date
(and notwithstanding any vote of the Board of Trustees of the Acquired
Fund) if circumstances should develop that, in the opinion of either of the
parties' Board of Trustees, make proceeding with the Agreement inadvisable.
9.2 If this Agreement is terminated and the exchange contemplated
hereby is abandoned pursuant to the provisions of this Section 9, this
Agreement shall become void and have no effect, without any liability on
the part of any party hereto or the trustees, officers or shareholders of
the Acquiring Fund or of the Acquired Fund, in respect of this Agreement.
10. WAIVER.
At any time prior to the Closing Date, any of the foregoing conditions may
be waived by the Board of Trustees of the Acquiring Fund or of the Acquired
Fund, if, in the judgment of either, such waiver will not have a material
adverse effect on the benefits intended under this Agreement to the shareholders
of the Acquiring Fund or of the Acquired Fund, as the case may be.
11. MISCELLANEOUS.
11.1 None of the representations and warranties included or provided
for herein shall survive consummation of the transactions contemplated
hereby.
11.2 This Agreement contains the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof, and
merges and supersedes all prior discussions, agreements, and understandings
of every kind and nature between them relating to the subject matter
hereof. Neither party shall be bound by any condition, definition, warranty
or representation, other than as set forth or provided in this Agreement or
as may be set forth in a later writing signed by the party to be bound
thereby.
11.3 This Agreement shall be governed and construed in accordance with
the internal laws of the Commonwealth of Massachusetts, without giving
effect to principles of conflict of laws.
11.4 This Agreement may be executed in any number of counterparts,
each of which, when executed and delivered, shall be deemed to be an
original.
11.5 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein
expressed or implied is intended or shall be construed to confer upon or
give any person, firm or corporation, other than the parties hereto and
their respective successors and assigns, any rights or remedies under or by
reason of this Agreement.
11.6 The Acquired Fund is hereby expressly put on notice of the
limitation of liability as set forth in Article XI of the Declaration of
Trust of the Acquiring Fund and agrees that the obligations assumed by the
Acquiring Fund pursuant to this Agreement shall be limited in any case to
the Acquiring Fund and its assets and the Acquired Fund shall not seek
satisfaction of any such obligation from the shareholders of the Acquiring
Fund, the trustees, officers, employees or agents of the Acquiring Fund or
any of them.
11.7 The Acquiring Fund is hereby expressly put on notice of the
limitation of liability as set forth in Article XI of the Declaration of
Trust of the Acquired Fund and agrees that the obligations assumed by the
Acquired Fund pursuant to this Agreement shall be limited in any case to
the Acquired Fund and its assets and the Acquiring Fund shall not seek
satisfaction of any such obligation from the shareholders of the Acquired
Fund, the trustees, officers, employees or agents of the Acquired Fund or
any of them.
IN WITNESS WHEREOF, the Acquired Fund and the Acquiring Fund have caused
this Agreement and Plan of Reorganization to be executed and attested on its
behalf by its duly authorized representatives as of the date first above
written.
Attest:
...........................................
Assistant Secretary
Acquired Fund:
CALIFORNIA MUNICIPAL CASH TRUST
By: .......................................
Name: ....................................
Title: .....................................
Attest:
...........................................
Assistant Secretary
Acquiring Fund:
FEDERATED MUNICIPAL TRUST, on
behalf of its Portfolio,
California Municipal Cash Trust
By: .......................................
Name: ....................................
Title: .....................................
FEDERATED SECURITIES CORP.
(LOGO)
- ---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
G00254-01 (6/94)
CMR405116
STATEMENT OF ADDITIONAL INFORMATION
JUNE 20, 1994
ACQUISITION OF THE ASSETS OF
CALIFORNIA MUNICIPAL CASH TRUST
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
TELEPHONE NUMBER: 1-800-245-5000
BY AND IN EXCHANGE FOR SHARES OF
CALIFORNIA MUNICIPAL CASH TRUST,
A PORTFOLIO OF FEDERATED MUNICIPAL TRUST
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
TELEPHONE NUMBER: 1-800-245-5000
This Statement of Additional Information dated June 20, 1994 is not a
prospectus. A Prospectus/Proxy Statement dated June 20, 1994 related to the
above-referenced matter may be obtained from Federated Municipal Trust, on
behalf of its portfolio, California Municipal Cash Trust, Federated Investors
Tower, Pittsburgh, Pennsylvania 15222-3779. This Statement of Additional
Information should be read in conjunction with such Prospectus/Proxy Statement.
TABLE OF CONTENTS
<TABLE>
<C> <S> <C>
1. Statement of Additional Information of California Municipal Cash Trust, a portfolio of
Federated Municipal Trust, dated June 16, 1994.............................................. 2
2. Statement of Additional Information of California Municipal Cash Trust, dated November 30,
1993........................................................................................ 2
3. Financial Statements of California Municipal Cash Trust, a portfolio of Federated Municipal
Trust, dated May 24, 1994................................................................... 2
4. Financial Statements of California Municipal Cash Trust dated September 30, 1993............ 2
5. Financial Statements (unaudited) of California Municipal Cash Trust dated March 31, 1994.... 2
</TABLE>
The Statement of Additional Information of California Municipal Cash Trust
(the "Portfolio") dated June 16, 1994, a portfolio of Federated Municipal Trust
(the "Trust"), is incorporated herein by reference to Post-Effective Amendment
No. 27 to the Trust's Registration Statement on Form N-1A (File No. 33-31259)
which was filed with the Securities and Exchange Commission on or about June 14,
1994.
The Statement of Additional Information of California Municipal Cash Trust
(the "Fund") dated November 30, 1993 is incorporated herein by reference to
Post-Effective Amendment No. 7 to the Fund's Registration Statement on Form N-1A
(File No. 33-26846) which was filed with the Securities and Exchange Commission
on or about November 30, 1993. A copy may be obtained from the Trust at
Federated Investors Tower, Pittsburgh, PA 15222-3279. Telephone Number:
1-800-245-5000.
The audited financial statements of the Portfolio dated May 24, 1994 are
incorporated herein by reference to the Portfolio's Prospectus dated June 16,
1994 which was filed with the Securities and Exchange Commission in Post-
Effective Amendment No. 27 to the Trust's Registration Statement on Form N-1A
(File No. 33-31259) on or about June 14, 1994.
The audited financial statements of the Fund dated September 30, 1993 are
incorporated herein by reference to the Fund's Prospectus dated November 30,
1993 which was filed with the Securities and Exchange Commission in Post-
Effective Amendment No. 7 to the Fund's Registration Statement on Form N-1A
(File No. 33-26846) on or about November 30, 1993.
The unaudited financial statements of the Fund dated March 31, 1994 are
incorporated herein by reference to the Registrant's Semi-Annual Report to
Shareholders dated March 31, 1994, and filed with the Securities and Exchange
Commission on or about June 1, 1994.
Pro forma financial statements are not included herein as the total
capitalization of the Portfolio is insignificant and, accordingly, such pro
forma statements would not materially differ from the financial statements of
the Fund. The Fund is considered to be the accounting survivor of the
transaction, therefore, the performance history of the Fund prior to the
Reorganization will be useful for historical comparative purposes. Shareholders
may obtain without charge a copy of the most recent annual and semi-annual
reports of the Fund which contain, respectively, audited and unaudited financial
statements of the Fund by writing the address shown above or calling the Trust
at 1-800-245-5000.
G00254-02
CALIFORNIA MUNICIPAL CASH TRUST
FEDERATED INVESTORS TOWER
PITTSBURGH PA 15222-3779
CALIFORNIA MUNICIPAL CASH TRUST
CUSIP NO. 130482102 FOR SPECIAL MEETING OF SHAREHOLDERS AUGUST 5, 1994
KNOW ALL PERSONS BY THESE PRESENTS that the undersigned
shareholders of California Municipal Cash Trust hereby appoint
Robert C. Rosselot, Carol Kayworth, Mason Douglas and Patricia
Conner, or any of them true and lawful attorneys, with power of
substitution of each, to vote all shares of California Municipal
Cash Trust, which the undersigned is entitled to vote, at the
Special Meeting of Shareholders to be held on August 5, 1994, at
Federated Investors Tower, Pittsburgh, Pennsylvania, at 9:00 a.m.
(Eastern Standard Time) and at any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES. The
attorneys named will vote the shares represented by this proxy in
accordance with the choices made on this card. IF NO CHOICE IS
INDICATED AS TO ANY ITEM, THIS PROXY WILL BE VOTED AFFIRMATIVELY
ON THAT MATTER.
Discretionary authority is hereby conferred as to all other
matters as may properly come before the Special Meeting.
PROPOSAL
1. TO APPROVE OR DISAPPROVE AN AGREEMENT AND PLAN OF
REORGANIZATION. PLEASE RETURN BOTTOM PORTION WITH YOUR VOTE
IN THE ENCLOSED ENVELOPE AND RETAIN THE TOP PORTION.
CALIFORNIA MUNICIPAL CASH TRUST PROXY VOTING MAIL-IN STUB
RECORD DATE SHARES
PROPOSAL 1:TO APPROVE OR DISAPPROVE AN
AGREEMENT AND PLAN OF
REORGANIZATION
o FOR the Agreement and Plan of
Reorganization
o AGAINST the Agreement and
Plan of Reorganization
o ABSTAIN
Please sign EXACTLY as your name(s) appear above. When signing
as attorney, executor, administrator, guardian, trustee,
custodian, etc., please give your full title as such. If a
corporation or partnership, please sign the full name by an
authorized officer or partner. If stock is owned jointly, all
owners should sign.
_______________________________________________________
_______________________________________________________
Signature(s) of Shareholder(s)
Date:___________________________________________________
